Chairman Price Statement at Hearing on HUD's Community Development Block Grant-Disaster Recovery Program

2019-10-17 15:12

Congressman David Price (D-NC), Chair of the Transportation, Housing and Urban Development, and Related Agencies Appropriations Subcommittee, delivered the following remarks at the Subcommittee's oversight hearing on HUD's Community Development Block Grant-Disaster Recovery (CDBG-DR) program:

I’d like to welcome today’s witnesses, Mr. Irv Dennis, Chief Financial Officer at HUD, and Mr. David Woll, Principal Deputy Assistant Secretary for Community Planning and Development.  On the next panel, we’ll be hearing from Mr. Jeremy Kirkland, who serves as counsel to the HUD Inspector General.  Thank you all for being here, and we look forward to your testimony.

HUD’s Community Development Block Grant-Disaster Recovery program, or CDBG-DR, is a vital tool for states and municipalities as they recover from major disasters.  Grantees use flexible CDBG-DR funding to rehabilitate and reconstruct damaged housing, buy out vulnerable or damaged properties, and repair public facilities such as community centers.  The activities must primarily benefit low- and moderate-income people in the most impacted and distressed areas.

Since 1993, Congress has provided more than $86 billion in supplemental appropriations for the CDBG-DR program.  As the severity and frequency of storms has increased, so has the need for funding.  In 2017 alone, Congress appropriated more than $35 billion for grantees recovering from major hurricanes Harvey, Irma, and Maria.  To put this into perspective, HUD’s entire budget in the last fiscal year was approximately $54 billion.

Unfortunately, Congress has never formally authorized the CDBG-DR program.  This means that for each appropriation, the Department must issue a notice in the Federal Register that outlines grantees’ funding allocations, program requirements, and waivers.  Without this notice, states cannot submit action plans to the Department, sign a grant agreement, and begin to draw funding—necessary steps that take at least several months once the notice is issued.  Today, there are dozens of Federal Register notices governing 123 active grants for 57 grantees across the country.

Issuing the Federal Register notice has taken longer in recent years.  After the 2005 Gulf Coast hurricanes, HUD needed 45 days after the initial appropriation to issue the notice.  After Sandy in 2012, it took 35 days.  But after the 2017 hurricanes, it took 145 days.  And when Congress appropriated CDBG-DR mitigation funding in February of last year, HUD didn’t issue a notice until August of this year, a delay of 18 months—that’s 547 days, and even then the notice came only after Congress included a statutory deadline.

But that’s only part of the story.  Rather than comply with the clear statutory language in bipartisan legislation that was signed into law by the President, HUD is withholding the required Federal Register notice for Puerto Rico.  The other affected states had to wait 18 months, which was bad enough, but Puerto Rico is still waiting.  As everyone knows, the island was utterly devastated by back-to-back hurricanes.  Nearly 3,000 people lost their loves, and tens of thousands of homes were damaged.  I’ve seen first-hand the challenges that must be overcome for a full recovery and the urgent need for this funding. 

HUD claims that they are not comfortable moving forward due to allegations about “fraud” and “corruption” in Puerto Rico.  This contradicts HUD’s own certification of Puerto Rico’s financial controls with respect to the CDBG-DR program.  Further, the notice is just an initial step in this process.  HUD must review the grantee’s action plan and eventually sign a grant agreement, which serve as additional checkpoints for financial controls or other questions about grantee capacity.

HUD also claims they cannot move forward as they await the release of a pending Inspector General report about Vivienda, the island’s housing department.  Our understanding is that the IG has identified some challenges regarding procurement and staff capacity, but not widespread corruption.  In any event, the IG has not asked HUD to withhold the notice or otherwise “slow walk” the funding.  Procurement challenges are common among grantees.  They should not be used as a pretext for punitive or prejudicial action.  HUD should publish the Federal Register notice without further delay. 

Just as concerning are reports that the HUD Inspector General is facing ongoing challenges accessing information—including emails and interviews with HUD staff—as part of their investigation into whether HUD has slowed the disbursement of funds to Puerto Rico.  If true, this is completely unacceptable and must be corrected.  We look forward to hearing directly from the IG later this afternoon.

Of course, the CDBG-DR program is bigger than just Puerto Rico, although Puerto Rico does seem to have been singled out.  Many states, including my home state of North Carolina, are implementing action plans or awaiting additional notices from HUD to tap into disaster funding that was appropriated last year and in June of this year. 

Meanwhile, both the HUD IG and GAO have raised important questions about HUD’s internal capacity, staffing, and oversight of the CDBG-DR program.  I look forward to a robust discussion of these topics, which will continue to be a major focus for the subcommittee.

Finally, I want to mention that this is the first CDBG-DR hearing we’ve had since the retirement of Stan Gimont, a long-time HUD staffer who many of us consider the foremost expert on this program.  His retirement is a loss to HUD and to the country, but we certainly wish him well in his next chapter.  We welcome Tennille Smith Parker, who is stepping up as Stan’s replacement.  The career staff at HUD do outstanding work, and I thank them for their service.

116th Congress